Top Middle East aluminium maker sees prices rising with demand

Image courtesy: WAM

The biggest aluminium producer in the Middle East, whose shareholders are considering an initial public offering (IPO), sees prices of the metal rising as demand gains, though it didn’t say when that increase is likely to happen.

Emirates Global Aluminium (EGA) expects its full-year sales volume to be in line with 2022 even as prices have declined over the last 12 months, CEO Abdulnasser Bin Kalban said in an interview Thursday. The company usually sells more of the metal in the second half of the year, Kalban said. It is focusing on containing costs to bolster margins in preparation for when the owners decide to hold the IPO.

Aluminium prices reached record levels in the wake of the conflict in Ukraine last year, which upended commodity markets by shifting trade flows and interrupting the supply of energy, grains and metals. Prices have since declined, trading about 6.5% per cent lower in London this year. Still sales of EGA’s most valuable products — including aluminum made with green energy — dropped in the first half of the year.

“We believe in the future of aluminium and we do believe that prices have some bright days ahead,” chief financial officer Zouhir Regragui said in the same interview.

Soaring demand for aluminium

Demand for new and recycled aluminium will be bolstered by the need for lightweight metal as a component of products in the energy transition as producers try to make everything from cars, airplanes and industrial equipment more efficient and cleaner.

In the first half, EGA’s net income fell to $533m from $1.6bn a year earlier. Revenue slipped nearly 20 per cent as sales of its “premium” products dropped 5 per cent. The realised price for the company’s aluminium was $2,359 a ton, compared with $3,063 a ton in the year-earlier period.

EGA aims to invest in an aluminium refinery in Guinea where it has a bauxite mine, Kalban said, without saying when the company would build that facility. Expensive borrowing because of high interest rates and the need to source cleaner energy for the project are among the issues delaying progress, he said.

The company is working to be ready to sell shares in an IPO when the owners see fit, Kalban said.

Read: UAE’s EGA posts $2bn in full-year net profit on higher prices